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 Table of Contents

1.0 Executive Summary.............................................................................................................................1

1.1 Mission........................................................................................................................................2
1.2 Objectives ...................................................................................................................................2
1.3 Keys to Success ........................................................................................................................2
Chart: Highlights ......................................................................................................................3
2.0 Company Summary.............................................................................................................................4
2.1 Company Ownership .................................................................................................................4
2.2 Start-up Summary ......................................................................................................................5
Table: Start-up .........................................................................................................................6
Chart: Start-up .........................................................................................................................7
Table: Start-up Funding ..........................................................................................................8
3.0 Products ...............................................................................................................................................8
3.1 Vendors.......................................................................................................................................8
3.2 The Dark Roast Java Menu .....................................................................................................9
3.2.1 Coffee and Espresso Drinks .......................................................................................9
3.2.2 Teas..............................................................................................................................12
3.2.3 Juices ...........................................................................................................................12
3.2.4 Italian Sodas ................................................................................................................13
3.2.5 Other Drinks.................................................................................................................14
3.2.6 Snacks and Pastries ..................................................................................................14
3.2.7 Deli Items .....................................................................................................................14
4.0 Market Analysis Summary................................................................................................................14
4.1 Market Segmentation..............................................................................................................15
Table: Market Analysis .........................................................................................................16
Chart: Market Analysis (Pie)................................................................................................17
4.2 Target Market Segment Strategy...........................................................................................17
4.3 Industry Analysis.......................................................................................................................18
4.3.1 Competitive Comparison...........................................................................................20
4.3.2 Competition and Buying Patterns .............................................................................22
5.0 Strategy and Implementation Summary..........................................................................................24
5.1 Competitive Edge....................................................................................................................24
5.2 Marketing Strategy ..................................................................................................................24
5.2.1 Launch Marketing........................................................................................................25
5.3 Sales Strategy..........................................................................................................................30
5.3.1 Sales Forecast ............................................................................................................32
Chart: Sales Monthly ...................................................................................................32
Chart: Sales by Year ...................................................................................................33
Table: Sales Forecast.................................................................................................33
5.4 Milestones ................................................................................................................................33
Table: Milestones..................................................................................................................34
6.0 Web Plan Summary ..........................................................................................................................34
6.1 Website Marketing Strategy...................................................................................................35
6.2 Development Requirements ...................................................................................................36
7.0 Management Summary ....................................................................................................................36
7.1 Personnel Plan.........................................................................................................................37
Table: Personnel ...................................................................................................................37
8.0 Financial Plan ....................................................................................................................................37
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 Table of Contents
8.1 Important Assumptions............................................................................................................38
Table: General Assumptions ...............................................................................................38
8.2 Break-even Analysis................................................................................................................39
Chart: Break-even Analysis .................................................................................................39
Table: Break-even Analysis .................................................................................................39
8.3 Projected Profit and Loss .......................................................................................................40
Chart: Profit Monthly .............................................................................................................40
Chart: Profit Yearly................................................................................................................41
Chart: Gross Margin Monthly ...............................................................................................41
Chart: Gross Margin Yearly..................................................................................................42
Table: Profit and Loss ..........................................................................................................43
8.4 Projected Cash Flow...............................................................................................................44
Chart: Cash ...........................................................................................................................44
Table: Cash Flow..................................................................................................................45
8.5 Projected Balance Sheet ........................................................................................................46
Table: Balance Sheet ...........................................................................................................46
8.6 Business Ratios .......................................................................................................................47
Table: Ratios .........................................................................................................................48
Table: Sales Forecast ...............................................................................................................................1
Table: Personnel ........................................................................................................................................2
Table: General Assumptions ....................................................................................................................3
Table: Profit and Loss ...............................................................................................................................4
Table: Cash Flow .......................................................................................................................................5
Table: Balance Sheet ................................................................................................................................6

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 Dark Roast Java

1.0 Executive Summary

The concept

Thanks primarily to Starbucks, within the past 20 years the coffeehouse has bec ome a familiar
feature of American life. Every day, millions of Americans stop for an espresso-based coffee
drink. People who would not have dreamed of spending more than 50 cents for a cup of coffee
a few years ago now gladly pay $3 to $5 for their cappuccino, moc ha latte or vanilla ice
blended drink.

The specialty-coffee business is growing at a healthy pac e. During the past 20 years, there
has not been a single year, despite war and recession, in which spec ialty coffee sales have
not grown. In many years the increase has been in double digits. In addition, no coffeehouse
chains have failed during this time, although the list of casualties in other industries is quite long.

Starbucks, The Coffee Bean, Peet's, Diedrich's and other major chains serve average quality
drinks in establishments that have the same generic design appearance. Indeed, Starbucks
and The Coffee Bean are often referred to as "fast food" coffeehouses due to their "cookie
cutter" design. Now that Americans' coffee preferences have broadened and matured, many
are asking for more from their coffeehouse.

A niche exists that has yet to be filled for a high-volume, upscale, quality-driven
coffeehouse with a warm, inviting atmosphere. Dark Roast Java meets this need and fills this
niche. We offer high-quality products in an upsc ale environment. Furthermore, our high-profile
loc ation in Pleasantville provides a mixed customer base that will maintain high levels of
business in every season, at all times of the day, every day of the week.

Founders

Ned Powers- Sebastiane, founder of Dark Roast Java, has a long career as an entrepreneur and
marketing executive. He is the founder of Powers- Sebastiane Advertising & Public Relations and
Pan National Motor Tours. Co-owner Curt Yamaguchi has an intuitive understanding of the real
estate market. As a highly successful real estate broker and investor he brings several key
capabilities to the Dark Roast Java team, not the least of which is his ability to proc ure highly
desirable loc ations for future stores.

Financials

The company anticipates rapid ac ceptance of the Dark Roast Java concept in Pleasantville,
with revenues of $600,000+ in the first fisc al year, rising to more than $1,000,000+ in year
three. Net profit is projected to be approximately $99,000 in year one, growing to an estimated
$265,000 by year three.

An advanced and expandable point-of-sale system

After carefully trac king the performance of the Pleasantville store through an expandable and
highly detailed point-of-sale system, we will use this as a "blueprint" for expansion. For
example, daily sales are trac ked and analyzed by item, time period and cost of goods. Labor
requirements are matched to projected in-store sales based upon past performance for maximum
efficiency. Even after paying higher than average wages, we expec t to alloc ate no more than

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 Dark Roast Java
25% to labor costs.

This Business Plan only provides data on the Pleasantville coffeehouse.

Sources: US C ensus Bureau, Pleasantville C hamber of C ommerce, Specialty C offee Association of America.

1.1 Mission
Our goal is to be the coffeehouse of choice for the loc al Pleasantville community, downtown
business workers, tourists who visit the city, and students, by providing a higher quality
experience than any competitor. As a result, we intend to create coffeehouses that quickly
ac hieve profitability and sustain an attrac tive rate of return (20% or more annually) for our
investors.

We also want to make our contribution to the welfare of the loc al community by supporting
charitable and civic ac tivities. We will support the farmers who grow our coffee by using Fair
Trade, Sustainable Production and Organic products whenever possible.

Dark Roast Java also awards its business to as many loc al suppliers as possible, keeping the
business in the community or, at the least, in the state.

1.2 Objectives
· Make Dark Roast Java the number one destination for coffee in Pleasantville

· Sales of $600,000+ the first fisc al year, $750,000+ the second fisc al year and $1 million
the third fisc al year

· Ac hieve a 15% net profit margin within the first year and 30% by FY3

· Ac hieve a total net profit of $150,000+ in FY1 and $200,000+ by FY3

· Be an ac tive and voc al member of the community, and provide continual re-investment
through participation in c ommunity ac tivities such as the Chamber of Commerce and
financial contributions to loc al charities and youth organizations

· Create a solid concept in the industry and trac k performance in order to begin
expanding to other markets within six months

1.3 Keys to Success

The keys to our success will be:

· A superior-tasting product bac ked by a unique quality store

· A relaxing, upsc ale interior design

· Prime site selection with an upsc ale affluent population, year-round tourist ac tivity,

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 Dark Roast Java
heavy pedestrian traffic by the site, a dynamic student population and a concentration of
loc al businesses

· A market that exposes Dark Roast Java to high-profile "trend-setters" and "key
influencers"

· Ongoing, aggressive marketing

· Highly trained and friendly staff

· Multiple revenue streams including gift items, gift baskets and coffee gift/frequency cards
in addition to coffee, pastry, chocolates, tea, juice, water and soft drinks

· A dynamic website with online sales capability

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 Dark Roast Java

2.0 Company Summary

Dark Roast Java launches with its first coffeehouse loc ated in downtown Pleasantville. Dark
Roast Java will offer residents and visitors a totally new style of coffeehouse - one offering a
uniquely flavorful coffee drink and a comfortable, upsc ale environment at which to socialize, relax
or work.

· Variety: No other coffeehouse in the area will provide the range of coffee drinks, tea,
coc oa, juice, smoothies and other products that Dark Roast Java does.
· Location: Dark Roast Java will be loc ated in the prime section of downtown Pleasantville
in the heart of the shopping and entertainment district. Dark Roast Java loc ations are
designed for high volume year round, with revenues and profits to match.
· Expansion: Assuming this store is successful, it will be the first of a chain of Dark
Roast Java coffeehouses loc ated in markets that have similar demographic profiles,
significant traffic by the store, year-round tourist ac tivity and a sizeable student
population.

The Dark Roast Java Concept

At one time Cadillac was the ac knowledged quality automobile in America. Then came
Mercedes-Benz. And then Lexus, with its superb product and service approach. Dark Roast
Java will be the first "Lexus" of the coffeehouse chain industry, offering a higher quality
product and better quality service in an exceptional environment. The only coffeehouse that
comes close to being as upsc ale as our concept in the Pacific Northwest is Torrefazione, with its
high style Italian dec or (they were recently part of a $72 million dollar buy-out by Starbucks).

The first Dark Roast Java is loc ated in Pleasantville. Other Dark Roast Java coffeehouses will
eventually be loc ated in select affluent markets that support the business model (e.g. Mount Hill,
Newburg, Springfield, Bayview, Orchard Valley, Beac hey Head, Capital City).

Dark Roast Java offers a superior coffee product, delicious pastries, fresh juices, the finest tea
drinks, Ghirardelli coc oa, gourmet chocolates and gift items.

The Dark Roast Java staff members who prepare the coffee (baristas) are highly trained and
experienced. They know how to prepare an excellent espresso-based drink and brew tasty
coffee. We use the highest quality equipment and ingredients to deliver a noticeably superior
product.

Our design style is different from all other coffeehouses, an upsc ale "Cote d'Azur" look. It
features stained glass dec orations, art glasswork, Mediterranean Riviera style furnishings and
outdoor dining.

2.1 Company Ownership

Dark Roast Java is a privately held corporation. It is registered as a state LLC Corporation, with
ownership shared by Ned Powers- Sebastiane, Victor Lubitsc h, Curt Yamaguchi and other
outside investors.

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 Dark Roast Java

2.2 Start-up Summary

Start-up expenses are in line with those of other coffeehouse chains. For example, Starbucks
spends approximately $380,000 on average to build-out a new store loc ation. Our costs are an
estimated $225,000 and $25,000 for opening inventory and operating capital. Future stores
should cost no more than $175,000 to build out since many of the costs incurred here will not
have to be repeated later.

The Start-up requirements, below, include $77,000 of short and long-term assets.

Long term assets: $62,000

Undercounter Refrigerators $5,000

Service/Prep Counter $12,000

Ice Machine $3,500

Large Refrigerator $1,000

Milk Coolers (3) $1,000

Cash register (2) Point of $14,000

Sale System
Espresso Machine $11,000

Fetco Coffee Brewer $2,500

Counters/Condiment bar/ $12,000

shelving

Short-term assets: $15,000

Tables, Chairs, Furnishings $12,000

Persian Carpet $1,000

Lighting Fixtures $2,000

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 Dark Roast Java

Table: Start-up
Start-up

Requirements

Start-up Expenses
CONSTRUCTION $0
Site design, architectural plan $10,000
Demolition/Construction $25,000
Electrical, Lighting $12,000
Electrical, Other $10,000
Flooring/installation $5,000
Bathroom Construction $4,000
Plumbing $10,000
Fireplace Construction $5,000
Painting $2,500
City permits/licenses/fees $6,500
Inserted Row $0
LEGAL $0
Accounting $2,000
Legal $4,000
Insurance $2,500
Inserted Row $0
MARKETING $0
Opening marketing/advertising $3,000
Graphic design for signage, menu boards $2,000
Outside Signage $1,500
Frequency Cards, Brochures $1,500
Inserted Row $0
OFFICE $0
Office equipment $600
Computer, scanner, printer $2,000
Telephones/Fax/DSL $500
Stationery etc. $1,000
Gift item displays (3) $1,500
Inserted Row $0
APPLIANCES, ETC $0
Preparation equipment $1,000
Dishwasher $3,500
Blenders (3) $2,000
Microwave $500
Panini maker $700
Storage racks $1,000
Music system $800
Food display case $6,000
Storage room shelving $1,000
Bulk bean grinder $700
Sinks (2), prep counters $1,200
Menu board construction $2,500
Cups/Lids (50,000) $14,000
Total Start-up Expenses $147,000

Start-up Assets
Cash Required $1,500
Start-up Inventory $25,000
Other Current Assets $15,000
Long-term Assets $62,000

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 Dark Roast Java
Total Assets $103,500

Total Requirements $250,500

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 Dark Roast Java

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $147,000
Start-up Assets to Fund $103,500
Total Funding Required $250,500

Assets
Non-cash Assets from Start-up $102,000
Cash Requirements from Start-up $1,500
Additional Cash Raised $0
Cash Balance on Starting Date $1,500
Total Assets $103,500

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0

Capital

Planned Investment
Investors $250,000
Other $500
Additional Investment Requirement $0
Total Planned Investment $250,500

Loss at Start-up (Start-up Expenses) ($147,000)

Total Capital $103,500

Total Capital and Liabilities $103,500

Total Funding $250,500

3.0 Products
Dark Roast Java sells high-quality specialty coffee beverages, tea, juice, water, soft drinks,
pastries, chocolates and gift items. Despite being an upsc ale coffeehouse, our prices are in
line with the leading national chains.

3.1 Vendors
· Coffee roasting is provided by Grizzly Mountain Coffee Company, Pleasantville.

· Tea is primarily supplied by Harney & Sons Tea, Connecticut.

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 Dark Roast Java
· Our water vendor is Crystal Geyser, St. Helena, CA

· Juices are provided by Longhorn Orchards, Corpus Cristi, TX (fresh orange juice and
lemonade) and Genesis Juice, Eugene, OR

· Pastries are provided by loc al Pleasantville companies such as D'Angelo's Bakery,

Pleasantville Bisc otti and Pleasantville Cheesecake.

· Choc olates and coc oa are from Ghirardelli Chocolate Company, San Francisc o, Bellagio,
Los Angeles and Blac k Forest Chocolates, Arnold, CA

· Gift items are from various vendors

· Soft drinks are provided by Sprecher's Brewery, Milwaukee, WI, and Thomas Kemper
Soda, Seattle, WA

3.2 The Dark Roast Java Menu

The Dark Roast Java menu sets us apart from other coffeehouses, giving us a competitive edge.

· We offer six groups of drinks—coffee, tea, Italian sodas, smoothies, juice and coc oa—
with several choices within eac h group. This enables us to provide more variety than
our competitors while keeping the preparation of the drinks easy to execute.

· We are taking advantage of the immense popularity of flavored drinks and Chai tea by
offering a product mix that includes items the other coffeehouses don't carry as well as
more familiar drinks.

· We are the only coffeehouse to have a wide range of gourmet hot coc oa.

· Dark Roast Java offers several smoothie drinks and Italian sodas.

· We carry the highest quality fresh juices.

Prices have been determined after a thorough analysis of all food costs for every item in eac h
drink. In some cases, an average price has been c alculated and applied to all similar drinks in
order to keep the menu from confusing the customer.

3.2.1 Coffee and Espresso Drinks

COFFEE

Coffees of the day: Dark Roast Java Blend, Riviera Roast, and Molokai Swiss water
proc ess DeCaf.

$1.60 Regular $1.85 Large

ESPRESSO

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 Dark Roast Java
Name Description Regular Large
Espresso A double shot $1.75 Double
of straight espresso.
Caffe Americano Espresso combined with $1.85 $2.25
hot water, a gourmet
brewed coffee.
Cappuccino Espresso with a smooth $2.50 $3.50
topping of milk foam.
Caffe Latte Espresso combined with $2.75 $3.25
steamed milk, topped
with a small amount
of velvety milk foam.
Caffe Mocha A Caffe Latte combined $3.00 $3.75
with Ghirardelli
chocolate, topped with
whipped cream and
chocolate shavings.
Espresso Macchiato A straight shot of $1.75 $2.50
espresso topped with a
spoonful of rich milk
foam.
Espresso Con Panna A straight shot of $1.75 $2.50
espresso topped with a
generous dollop of
whipped cream.
Espresso Latte Breve Our famous latte $2.50 $3.50
made even more
creamy with half and
half.
Espresso "Red Eye" Espresso combined with $2.00 $2.75
our gourmet coffee of
the day to get your
day going.
COFFEE DRINKS

Name Description Small Large

The Banana Nut Java Coffee. Warm milk. $2.75 $3.75
Banana, mac adamia nut
and vanilla syrups.
Topped with whipped
cream and cinnamon
dusting.

The Cafe Milano Coffee. Warm milk. $2.75 $3.75

Amaretto and vanilla
syrups topped with
whipped cream and
almonds.
FLAVORED ESPRESSO DRINKS

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 Dark Roast Java
All flavored drinks feature quality Monin and Ghirardelli syrups.

Name Description Regular Large

Vanilla Cappuccino Cappuccino made $2.50 $3.50
with vanilla flavored
milk foam.
Vanilla Latte A Caffe Latte with $3.00 $4.25
vanilla essence added.
White Chocolate Espresso, white $3.00 $4.25
Latte chocolate flavoring and
steamed milk topped
with velvety foam
and white chocolate
shavings.
The 50/50 Latte Espresso. Vanilla and $3.00 $4.25
orange syrups,
steamed milk and
whipped cream topping.
The Raspberry Mocha Coffee. Raspberry $3.25 $4.50
Latte and chocolate
syrups. Half and
half. Whipped cream
topping.
Chai Latte Espresso. Chai. $3.00 $4.25
Steamed milk and
whipped cream.
HOT COCOA DRINKS

All hot coc oa drinks are $2.75

Name Description
French Vanilla Cocoa Hot coc oa with vanilla and whipped cream.

White Chocolate Cocoa Hot coc oa with white chocolate and whipped
cream.
Chocolate Truffle Cocoa Rich dark hot coc oa with whipped cream
topping.
Holiday Spice Cocoa Rich hot coc oa and holiday spices. Topped with
whipped cream.
Peppermint Cocoa Rich c hocolate and refreshing peppermint.
Topped with whipped cream.
Ovaltine Ovaltine Chocolate Malt and milk.
SMOOTHIES

All smoothies are $3.75

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 Dark Roast Java
Name Description
The Espresso Chocolate Malt A chocolate malt for grownups.
The Double Dutch Chocolate Smoothie Very chocolatey!
The Mocha Smoothie An all-time favorite.
The Vanilla Smoothie Rich natural vanilla flavor.
50/50 Smoothie (Orange and Vanilla) A 50's favorite.

3.2.2 Teas
ICED TEAS

Classic American Iced Tea, just like you remember as a kid.

$1.50 Small, $1.75 Medium, $2.00 Large

HOT TEA

$1.50 Regular

· Earl Grey
· English Breakfast
· Peppermint
· Herb Apricot
· Earl Grey Lavender
· Darjeeling
· Formosa Oolong
· Golden Flowers Herbal
· Herbal Lemon
· Tropical Green

CHAI TEAS (hot or ice blended)

Chai Original (regular or decaf): $2.00 Regular $3.00 Large

Vanilla Chai: $2.00 Small $2.50 Medium $3.00 Large

3.2.3 Juices

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 Dark Roast Java
Name Description Regular Large
Fresh squeezed Exclusively from $1.50 $2.75
orange juice Longhorn Orchards,
Corpus Cristi, TX
Old-fashioned Made fresh daily from $1.50 $2.75
Lemonade Pleasant County
lemons.
Genesis Juice Protein Boost, $2.95
Green Machine,
Mango and Guava.
Martinelli's Apple A San Francisco $2.00
Juice (regular and favorite.
sparkling)
Crystal Geyser $2.50
Juice Squeeze

3.2.4 Italian Sodas

ICED ITALIAN SODAS

Sparkling spring water, flavoring and ice. Blended or on the roc ks.

Medium $1.50, $2.25 Large

· Orange Soda
· Strawberry Soda
· Lemon Soda
· Cherry Soda
· Raspberry Soda
· Cream Soda (made with half & half)
· Peach Soda
· Kiwi Soda
· Melon
· Apple

SPECIALTY ITALIAN SODAS

All $1.75 Regular, $2.50 Large

Name Description
The Dreamsicle Soda Sparkling spring water, ice, half and half, vanilla
and mandarin orange syrups.
Cherry Vanilla Soda Sprite, ice, cherry and vanilla syrups.
The Chocolate Soda Our version of an egg cream.

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 Dark Roast Java

3.2.5 Other Drinks

Name Description Price

Geyser Peak Natural From Northern California $1.25
Spring Water mountain springs.
Soft drinks from Sprecher's, Root beer, Orange Cream, $1.50
Stewart's and Thomas Ginger Ale, Vanilla Cream and
Kemper. Key Lime.
Crystal Geyser Tejava Tea $2.50
RockStar Energy Drink $2.00

Orangina Citrus Drink $2.00

3.2.6 Snacks and Pastries

Item Price
Pleasantville Cheesecake, $2.00
made just for us by Pleasantville
Cheesecake Company.
Fresh scones, hot from the oven. $1.75
Bagels $1.00
Brownies $2.00
Blueberry Muffins $2.00
Croissants $2.00
Black Forest chocolate-covered $4.00
espresso beans
Best Ever Bakery Fancy Cookies $1.75

3.2.7 Deli Items

Item Price
Sandwiches: Turkey, Roast Beef, $6.75
Ham and Salami.
Soup $3.50
Quiche $4.50

4.0 Market Analysis Summary

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 Dark Roast Java
Dark Roast Java launches with an exciting new coffeehouse concept in a receptive and
steadily growing market segment—the spec ialty coffee retail business.

Despite economic downturns in recent years the specialty coffee business has been a bright
spot. While literally hundreds of businesses in many categories are fac ing poor sales, negative
balance sheets and even bankruptcy, coffee chains continue to show strong growth.

It's clear that America's love for good coffee continues during good times and bad.

Pleasantville: The Perfect Launch Market

By launching Dark Roast Java in the Pleasantville market we maximize our potential for success
due to several fac tors:

· The highly affluent loc al population

· Year-round tourist ac tivity
· Ever-changing upsc ale student population
· Excellent auto and pedestrian traffic by our loc ation
· Low media costs
· High number of loc al special events
· Prime site loc ation

Dark Roast Java is loc ated at what is arguably one of the best loc ations for a coffeehouse in
Pleasantville—in the heart of the tourist and business district, adjac ent to fine dining and
shopping, next to the historic Egyptian Theatre and just steps from the busiest intersection in
town.

Dark Roast Java Coffee has all the ingredients nec essary for immediate success.

4.1 Market Segmentation

Dark Roast Java's customer base in Pleasantville is comprised of five target groups.

1. Affluent loc al residents

2. Tourists
3. Local business people
4. Students
5. Travelers passing through

These groups are all potentially strong customer segments. The benefit of this mix of
customers is that it helps maintain consistent business throughout the year. For example, while
tourism is strong all year long in Pleasantville, it peaks during the summer months. Conversely,
the student population is not as strong during the summer as it is from September through
June of eac h year.

The other customer segments (loc al residents, loc al business and pass- through traffic on US 66)
provide a consistent foundation all year long.

Also, by appealing to several market segments, Dark Roast Java does not bec ome overly
dependent on any single consumer group. For example, several loc al coffeehouses with
primarily student customers do poorly during the non-school months. They must also market
themselves anew eac h year to the incoming students. Dark Roast Java will avoid these peaks

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 Dark Roast Java
and valleys in business with a mix of customers.

· Affluent locals. Within five miles of Dark Roast Java are 200,000 of the most affluent
people in America. Homes in adjac ent Niceburg sell for $1 million to $50 million. Key
influencers, trendsetters, artists, writers and celebrities have homes in Pleasantville.

· Tourists. More than 5,000,000 tourists visit Pleasantville every year. Most will pass by
the Dark Roast Java loc ation. Tourist come to "America's Riviera" for the beaches,
shopping, dining and nearby vineyards.

· Local business people. Dark Roast Java is loc ated on the corner of 'A' Street
and First Avenue in the heart of the prime downtown business district. It's ac ross
from the exclusive, chic, Descarte (I Spend, Therefore I Am) department store, and one
bloc k from the number one shopping destination in Pleasantville, Lucre Galerie. 'A' Street
and Frist Avenue are the two most heavily traveled streets in Pleasantville.

· Students. Pleasantville is home to a major branch of the State University as well as

dozens of other schools, including many prestigious private sc hools and ac ademies.
Pleasantville High Sc hool is less than a mile from Dark Roast Java.

· Travelers on US 66. One of the state's two major north/south routes passes through
Pleasantville. Ac cording to Dept of Transportation, more than 35 million auto trips will
pass through the city. Many of these travelers will stop for a meal, to refuel and have a
cup of coffee. US 66 is also a heavily traveled commuter route to Shorewood
and Beac hey Head to the south.

Sources: Department of Transforation, State University, Pleasantville C hamber of C ommerce.

Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Local residents 2% 75,000 76,500 78,030 79,590 81,181 2.00%
Tourists 5% 100,000 105,000 110,250 115,763 121,551 5.00%
Travelers on US 66 5% 20,000 21,000 22,050 23,153 24,311 5.00%
Students 1% 40,000 40,400 40,804 41,212 41,624 1.00%
Local businesses 1% 20,000 20,200 20,402 20,606 20,812 1.00%
Total 3.22% 255,000 263,100 271,536 280,324 289,479 3.22%

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4.2 Target Market Segment Strategy

Overall, our strategy is to maintain a constantly high customer count by leveraging our appeal to
five groups of potential customers.

Local Residents. Approximately 200,000 people live within five miles of our Dark Roast
Java loc ation. The most affluent of these live even c loser, within three miles. It is a short
5 minute drive to Dark Roast Java for most of our potential loc al customers. Excellent
public parking is available within 100 yards.

Local customers form the loyal core of our business. We will reac h out to them through
loc al marketing, involvement in the Chamber of Commerce, support of loc al charitable
organizations and sponsorship of events and youth sports teams.

Tourists. Pleasantville has excellent year-round tourist ac tivity. About 5 million people will
visit the area during the next year. While hotels are virtually sold out during the
summer months, tourism all year is exceptionally strong. This is due in large part to the
temperate climate, weekend or day-trip visitors from the greater Ontopolis area and an
unusually large number of special events (e.g. film festivals, concerts, art shows)
sc heduled throughout the year.

With a troubled economy and fears of terrorism, more people are opting for the relatively
inexpensive, easy and safe short trip to Pleasantville for recreation. And, ac cording to the
Chamber of Commerce, 90% of all tourists visiting Pleasantville will pass by the Dark Roast
Java loc ation.

We will target these potential customers with ads in loc al tourism guides.

Local businesses. Many loc al businesses, both private and government, are within two

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bloc ks of Dark Roast Java. Lucre Galerie, the prime shopping center of Pleasantville, is
one bloc k away. The county courthouse is two bloc ks away. Dark Roast Java is in the
heart of the shopping and dining area.

Because much of the employee parking is out of the immediate area with shuttle service
to downtown, most people stay near their plac e of employment during breakfast, lunch
and for after-work relaxing. A significant number of these loc al business people find
Dark Roast Java an inviting and convenient destination.

We also offer coffee service to loc al restaurants, night spots and businesses. Coffee
service brings in additional revenue and promotes Dark Roast Java among employees at
these businesses.

We will also reac h business customers through Chamber of Commerce ac tivities and by
personally visiting the shops and businesses to distribute disc ount coupons and menus.

Students. The area has more than 30,000 students in several schools, including nearby
City College and State University. Students, most of whom are under the drinking age,
have few plac es they can go to meet their friends. Coffeehouses have proven to be
very popular with students—even high school students—as an "in" plac e to go that's
also affordable.

To reac h students we offer special student disc ount cards, pass out free coffee
coupons at student events and offer entertainment on weekends.

Students represent an excellent customer segment for several reasons:

· Students bring an energy and youth to the coffeehouse

· By attrac ting students we generate excellent word-of-mouth
· Students represent a large base of potential part-time employees
· Often under the drinking age, students need an affordable plac e to hang out
with their friends

Travelers on US 66. The Dept of Transportation estimates that there will be 35 million
auto trips through Pleasantville this year, a number that is increasing every year. US 66 is
one of two major freeways in the state and the one favored by travelers who want to
take a bit more time and make a few stops during their trip. It's also a major commuter
route to the cities to the south in Sunshine County.

Our primary method of reac hing this target customer group will be our participation as a
AAA member, offering a 20% disc ount on all coffee and tea drinks when AAA members
show their membership card.

We also conduct PR ac tivities in media outside the loc al market to expose the Dark
Roast Java name to a wider state and national audience.

Source: Dept of Transportation, Pleasantville C hamber of C ommerce, US C ensus Bureau.

4.3 Industry Analysis

The specialty retail coffee business as we know it today began in 1982 after Howard Sc hultz
purchased the Starbucks name and began the expansion of the modern Starbucks chain. Prior to

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his transformation of the business, Starbucks sold only whole bean c offee.

Coffeehouses in America have existed since the 1600's, and the coffeehouse concept is more
than 400 years old. In the United States, even as recently as the 1970's, coffeehouses have
been primarily independent businesses, typically with an eclectic Bohemian style.

Cafe Trieste in San Francisc o is typical. It was once a gathering plac e for "Beats" and
"Hippies." Poetry readings were held weekly. It still retains much of its original flavor. Many of
these independent coffeehouses continue to enjoy a loyal following.

Starbucks' success has encouraged others to enter this potentially lucrative business. Today
there are more than 13,000 c offeehouses in the U.S. However, compared with Italy, which has
200,000 espresso bars and coffeehouses, there is still much room for growth. The Spec ialty
Coffee Retailers Assoc iation believes the market has not approached maturity and, as yet, no
coffee chain has differentiated itself significantly from the others.

While overall coffee sales have not grown significantly in recent years, the specialty coffeehouse
segment is growing steadily at a healthy pac e every year. The low food cost of coffee drinks,
relatively modest investment capital requirements, and low overhead, lead to high profit margins
in the coffeehouse industry.

There are 108 million coffee drinkers in the United States, ac cording to the National Coffee
Assoc iation's report "2000 Coffee Drinking Trends." 77% of coffee drinkers consume coffee
daily. Coffee drinkers spend an average of $164.71 on coffee annually, and drink an average
3.1 c ups daily. It's easy to see why coffee is second only to oil as the largest commodity in
the world.

Twenty-five years ago, almost nobody consumed espresso or espresso-based drinks in the
United States. Now they ac count, for more than half of all spec ialty coffee consumed.
Obviously, America's coffee-drinking habits are changing.

In the past five years the number of "gourmet" coffee drinkers has increased from 7 million to
27 million. In 2001 53% of all adults in the U.S. drank spec ialty coffee. By 2002 the percentage
had grown to 62%. Year after year, the growth c ontinues at sizeable rates.

Starbucks, once known for quality and customer service, has recently come under attac k by
customers and business commentators for bec oming too big. Their size (6,300 stores
worldwide) is the reason why Starbucks is now often c alled the "Mc Donald's" of coffee chains.
If Starbucks' image bec omes one of a "fast food" purveyor of coffee, it leaves the market open
for a smaller, more nimble competitor like Dark Roast Java, where quality and service are
paramount.

As the graph below showing Year 2000 per capita coffee consumption illustrates, the United
States is not presently one of the stronger markets for coffee drinking. It's easy to see there
is significant room for growth in c onsumption. The coffeehouse chains of America are leading this
growth.

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Coffee drinking per capita by country.

4.3.1 Competitive Comparison

"Until everybody can walk to a coffeehouse and get a properly prepared espresso
drink, we're not even approaching market saturation."

-- Mike Ferguson, Marketing & Communications Director

Spec ialty Coffee Assoc iation, Long Beac h. 2002.

Leaders in the specialty coffee chain c ategory in the United States include:

Starbucks (6,300 stores). Started the specialty coffee chain phenomena in America in 1982.
99% are company owned. Revenues exceeded $6 billion in 2002. Average store gross revenue
is $805,000. Now in 30 c ountries. Same store sales increased by 10% in 2002.

Caribou Coffee (260 stores). Second largest all company- owned chain. Founded in 1992 in
Minneapolis.

Tully's (103 stores). The third largest company- owned chain. Another Seattle-born c ompany.
The only coffeehouse chain that has not experienced excellent growth every year; business.com
cites poor management as as the reason. New management seems to leading a turnaround.

Coffee Bean & Tea Leaf (210 stores). Oldest privately held specialty coffee retailer in the U.
S. (founded 1963). 90% of stores are franchises.

Peet's (58 stores) One of the few successful IPO's in 2001. 58% of revenues come from sales
of whole coffee beans. Gross profit last year was 49.5%.

Gloria Jean's (291 stores, 195 in U.S.). Only 19 stores are company owned.

Seattle's Best (150 stores). Owned by AFC, which also owns Popeye's Chicken, Church's,
Cinnabon and Torrefazione Italia Coffee (21 stores). Seattle's Best is also distributed at

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7,000 loc ations such as groc ery stores and office buildings.

Diedrich Coffee Company Originally founded in 1916 when the owners inherited a coffee
plantation. Headquartered in Southern California. First coffeehouse in 1982. Owns the Gloria
Jean and Coffee People chain. 386 outlets total and 370 wholesale ac counts. Although they
serve an excellent product they have operated "below the radar."

Bucks County Coffee A Mid-Atlantic chain of 40 stores founded in 1982. Has a very good
reputation.

PJ's Coffee & Tea (22 stores). This New Orleans-area chain owns four of their stores.

Java Dave's (14 stores). Mostly in the Oklahoma area, 12 are franchises and two are
company owned.

Quikava (68 loc ations). A unit of the Massac husetts- based Chock Full O'Nuts organization.
Many are kiosks. All but three are franchises.

New World Coffee (33 stores). Mostly concentrated in the New Jersey/New York area. All but
three are franchises. A division of Manhattan Bagel.

Bad Ass Coffee Company (29 stores). Begun in Hawaii, this company has grown rapidly by
offering a Hawaiian-grown c offee and a milder, mellower brew.

It's a Grind (86 stores). Fast-growing chain that began in Long Beac h, California seven years
ago. Most loc ations are franchises. Concentrated in Southern California and Las Vegas. Company
reported $12 million in revenue in 2002. Its stores average more than $500,000 gross revenue.

Dunkin' Donuts More than 800 outlets serving a surprisingly good coffee. Many people think
it's the best.

Specialty coffee chains in Canada:

Blenz (27 stores).

Second Cup (401 stores)

Tim Horton's (2,100 stores/150 in U.S.). This store is very close to being a Dunkin' Donuts style
operation where baked goods are the primary products.

Although the spec ialty coffee industry is successful and expanding rapidly, there is still much
room for growth—espec ially in niche market segments, ac cording to The Specialty Coffee
Assoc iation of America. Market maturity is not expec ted to be reac hed until at least 2019.

Sources: Business.com, Yahoo Business, Dun & Bradstreet, Hoover's Business Data, Starbucks C orporation,
Specialty C offee Association, National C offee Association. 2002.

Local Competition

Surprisingly, the leading coffeehouse chain, Starbucks, has only medioc re stores in the
Pleasantville area (eight loc ations). Its highest volume store (1,150 c ustomers daily) is at an
excellent loc ation on 'A' Street, the main thoroughfare in town, but the store is unattrac tive,
small and lac ks outside seating.

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The other high-volume Starbucks is loc ated at the end of a shopping mall in Mount Hill and
averages 952 c ustomers daily. It is not a particularly attrac tive store, although it does have a
sizeable lounge area and some outside seating.

Other Starbucks loc ations in the Pleasantville area are even less memorable, with small
fac ilities and medioc re loc ations. Photos of some of these loc ations are shown in the appendix.

Coffee Bean also has an excellent loc ation directly ac ross the street from Starbucks on 'A' Street
in downtown Pleasantville. This busy coffeehouse is very small. A counter inside and a couple
of tables outside are the only areas for customers to sit down. A second Coffee Bean opened
in 2002 on the northern end of 'A' Street, about three miles from downtown. Another loc ation
in Mount Hill is sc heduled to open in Summer 2004.

Other competitors include three independent coffeehouses. Paradiseo is loc ated on State
Street in a good loc ation. They serve good coffee but have a limited menu and a very "funky"
dec or. It is a big hangout for the "Goth" and "punk" crowd. A second Paradiseo is loc ated in
Shorewood. New managers are trying to improve the store but without success so far.

Another independent is Grounds for Ac tion, loc ated in a residential neighborhood but on a busy
street in what was once a gas station. This coffeehouse is also very "collegiate" in its dec or, and
a favored haunt of the law school students, but manages to average more than 250 c ustomers
per day. They have a second loc ation in Springfield.

Ambrosia Kaffe is primarily a student hangout loc ated about three bloc ks off First Avenue in
the northern end of the business district. Its business is modest. The business has undergone
changes in management during recent years.

Both Barnes & Noble and Borders Books have integrated cafes that serves espresso drinks into
their store plans. Both of these are within two bloc ks of the Dark Roast Java site.

The Barnes & Noble coffee cafe is very small, loc ated in the rear of the store, and not very busy
despite serving Starbucks coffee.

The Borders Books cafe is larger, about 1,000 square feet, and does a good business. They are
in a good loc ation, adjac ent to the same major parking garage as Dark Roast Java and they
also draw from book shoppers and drop-ins from 'A' Street. The quality of their coffee and
pastries does not compare with ours, and the service can often be quite slow.

The Pleasantville Roastery is a bean roaster and coffeehouse with brick walls and a "San
Francisc o" style. The coffee is roasted on site. They do much of their business by mail order.
They suffer from a very poor loc ation in a difficult to find (or even see) shopping mall off
lower 'C' Street. A second, small outlet opened in 2003 in Lucre Galerie. Despite their poor
loc ation, this is probably the most formidable competitor in town. They make a quality cup of
coffee and have a loyal following.

4.3.2 Competition and Buying Patterns

Competition is dominated by the presence of Starbucks, fast bec oming the "Mc Donalds" of the
specialty coffee industry. Other major chains are Caribou Coffee, Peet's Coffee & Tea, Coffee
Bean & Tea Leaf, Seattle's Best, Gloria Jeans and Diedrich Coffee. All of these chains are
considered "clones" of Starbucks. Few vary much from what is perceived as a proven formula
for success.
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FACT: The coffeehouse business has grown every year since 1982.

FACT: Not a single coffeehouse chain has failed during the past 20 years.

Despite major economic recessions, terrorist attac ks and two wars over the past two dec ades,
the specialty coffee industry has grown every year. One industry observer said, "When times are
good the coffeehouse industry is great. And when times are bad the coffeehouse industry is
great." America's love for good coffee is stronger than ever and increasing in size faster than
any other industry.

Lifestyle fac tors converge to make the coffee industry strong at all times. The stimulant effect
of coffee is an important reason why many hard-working, fast-pac ed Americans consider a
stop at their loc al coffeehouse a nec essary part of their day. Conversely, coffeehouses
provide a calm, inviting environment for people to soc ialize, relax or catch up on work.

Young people under the legal drinking age are one of the fastest-growing segments of the coffee
drinking market. Coffeehouses provide them with a much-needed plac e to meet with their
friends.

Entertainment on weekend nights draws a young group of enthusiastic customers. The surge in
interest in c offee drinking among young people assures a diverse, receptive, sophisticated
customer base now and in the future.

Older adults also enjoy the fac t that for the relatively modest price of a cup of coffee and
snack, they can meet with their friends, relax or work. Instead of going to a bar and paying for
an alcoholic drink or a restaurant where a meal usually comes with a hefty price tag, the
coffeehouse is an intimate yet inexpensive venue.

Quality is deteriorating even as the industry is growing.

Coffeehouses need to produce a quality product to bac k up the perceived "little luxury" image.
Currently, most of the largest chains are bowing to the pressures of growth and are cutting
corners on quality by introducing fully automatic espresso mac hines, mass bean buying and other
efficiency measures.

Coffee drinking is now an all-day activity.

Once concentrated in the early morning hours or mid-afternoon, in recent years coffee drinking
has bec ome an all-day ac tivity. Even late at night, many coffeehouses are pac ked with
patrons. It's not unusual for a well loc ated coffeehouse to exceed a daily average of 900
customers.

Customer guest check averages are rising.

As pastries, chocolates, tea, pre-pac kaged sandwiches, snacks, juice drinks and gift items are
added to the menu, the average customer expenditure has risen. Many popular coffeehouses
report averages in the $4 - $6 range. Dark Roast Java expec ts that guest chec ks will average
about $4.50.

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5.0 Strategy and Implementation Summary

The Dark Roast Java coffeehouse uses a strategy of total quality—in product and service. Our
promise is in our loc ation, the products we sell, the people we attrac t and the atmosphere we
create.

Strategic Assumptions:

· People want a better-tasting coffee drink

· Coffee drinkers want a more inviting coffeehouse environment
· Coffee drinks are considered an affordable luxury
· The coffeehouse industry is largely unaffected by the economy and world events
· Dark Roast Java offers several unique advantages over all other coffeehouses

5.1 Competitive Edge

Our competitive edge, compared to the other coffeehouses in the greater Pleasantville area
includes the following:

· A significantly higher quality, better tasting coffee product.

· Our current loc ation can arguably be considered the best in the market—in the heart of
the downtown shopping, dining, entertainment and cultural district in Pleasantville and
adjac ent to the historic Egyptian Theatre.

· An ambiance superior to all other coffeehouses in the area with upsc ale "Cote d'Azur"
look. It features stained glass dec orations, art glasswork, Mediterranean Riviera style
furnishings and outdoor dining.

· The only coffeehouse downtown to provide regular weekend evening entertainment.

· A wider variety of popular drinks than our competitors, including flavored coffee drinks,
tea, chai, coc oa, juice and Italian sodas. We have several drink options for people who
don't drink coffee: tea, coc oa, juice and smoothies.

· Our Internet website will include sales of whole coffee beans, tea, chocolates, gift
items and gift baskets.

5.2 Marketing Strategy

Other coffeehouses rely almost entirely on word-of-mouth marketing to generate business. We
will engage in an ongoing aggressive marketing program that will help us establish profitability
quickly and set the stage for continual growth.

Our strategy will be to position Dark Roast Java as the "Lexus" of coffeehouses, offering a high
quality product and superb service in a superior environment.

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5.2.1 Launch Marketing

Most coffeehouse chains do little or no marketing and advertising. For example, Starbucks'
philosophy is that their ubiquity in the marketplac e is all they need to sustain and grow their
customer base. They spend less than 1% of gross revenues on advertising, and when they do
spend, it is usually to introduce a new product.

The retail coffee industry is a sales- oriented business with historically very little experience in
marketing and advertising. This is likely why little is done. As yet, the major players have not
been taken over by sophisticated companies like Pepsico, where marketing is viewed as essential
to gaining market share.

An element of our differentiation from other coffeehouse chains will be our use of advertising and
marketing to gain awareness, build customer traffic and establish a strong brand image. We
intend to create immediate customer awareness and not wait for word-of-mouth. We are also
building customer traffic immediately with an aggressive Launch Marketing Plan.

Launch Marketing

Launch marketing will promote awareness, build immediate traffic and establish our brand image
via several methods:

· Public relations/publicity
· Direct mail
· Local print and broadcast media
· Design and pac kaging
· Community involvement
· Sampling
· Superior loc ation
· Desirable store ambiance

Public Relations

A strong public relations/publicity program uses as its primary "hook" these three main points:

1. Dark Roast Java is Pleasantville's first true gourmet coffeehouse

2. Our unique quality products
3. Our distinctive latte "art"

The goal of the PR/publicity is to ac hieve loc al market awareness and establish the brand on a
wider sc ale to set the stage for future expansion. Local market awareness is vital bec ause
more than 50% of sales will come from people living within a 5-mile radius of the store.

National awareness will help drive the expansion by generating opportunities created by the
media buzz and familiarizing people with our brand name. It will help set the stage for future
brand identification.

Local Media

· The Pleasantville Gazette

· Pleasantville Magazine
· The Mount Hill Journal

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· The Pleasantville Weekly
· Mount Hill Magazine
· Pleasantville Dining
· Pleasantville Seasons
· ABC-TV (KTBO)
· KATF radio
· KEZI radio
· KWAS radio
· KSNZ radio
· KOBR radio
· KPML radio
· KKMN radiO
· KJBU radio
· KSEC radio
· KION radio

Regional/National Print Media

· BusinessWeek
· The Ontopolis Business Journal
· Time
· Newsweek
· US News
· Entrepreneur
· Wall Street Journal
· Fortune
· Forbes
· Robb Report
· Newspapers in top 50 US markets

National Broadcast Media

· Feature programming (e.g. Oprah, Good Morning America)

· 1,500 radio stations nationwide

Direct Mail

· Ongoing direct mail generated from our website data

· Visa or MasterCard loc al direct mail program

Website

Our website is fully e-commerce functional and could easily bec ome a significant revenue source.

We will eventually sell the following items online:

· Whole coffee beans, tea

· Gift baskets
· Gift items
· Furnishings

And in a first for any coffeehouse in the world, we will also sell a catalog of glass
artwork representative of our store dec or. We will ac t as the sales agent for a number of

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participating stained glass, and art glass artisans.

The website also markets Dark Roast Java with:

· A monthly newsletter
· Interesting information about the coffee industry
· A map to our store
· Store hours
· Special events
· Coffee recipes

Most of these functions are already up and running.

Trend-setters

Pleasantville and the southern part of the state are home to thousands of individuals who can be
important to the successful positioning of Dark Roast Java. One mention on a TV talk program
or in a 'lifestyle' magazine can (and has) launched many successful careers and businesses.

With literally hundreds of celebrities and wealthy business people as loc al residents, the word-
of-mouth recommendations from these people can drive significant business to us as well as
generate favorable publicity.

Many celebrities visit Pleasantville or have second homes here. The wife of the billionaire owner
of Nationwide Communications owns the Pleasantville newspaper. A former ac tor owns a loc al
vineyard and is a major hotel developer. Politicians and entertainers have interests in several
restaurants. Our Mount Hill loc ation will be in a building owned by a clothing brand multi-
millionaire.

Celebrities in Pleasantville are also ac tively involved in the community, many supporting several
loc al charities. Our involvement in the community will enable us to garner exposure for Dark
Roast Java among an important group of loc al residents.

Key individuals will be targeted with gift baskets from Dark Roast Java containing samples of
our products to entice them to visit Dark Roast Java and talk about us with their friends.

Design style

The interior design of Dark Roast Java is unlike any other coffeehouse chain. While there are
some upsc ale designs, they are all of the modern Italian or Starbucks look. Our upsc ale
stylized "Cote d'Azur" Mediterranean Riviera design, featuring stained glass dec orations, art
glasswork, differentiates us from all others.

Gift Items

We carry a wide variety of quality gift items, including gift baskets. Gift basket business could
eventually grow to be substantial. However, since it is difficult to project at this time we have
not included it in the financial computations. We also offer sales of stained glass and glass
artwork by the artisans who produced our dec or furnishings.

Community Involvement

We will make ourselves an integral part of the loc al and world community. This will generate
goodwill, create opportunities to forge important contac ts with key people and live up to our
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company Mission Statement.

Some of these community involvement goals include:

· Take an ac tive role in the Chamber of Commerce

· Supply complementary product to loc al charities for fund-raising ac tivities
· Sponsor loc al sports teams
· Create and sponsor a Pleasantville to La Pine cross- mountain foot rac e following the
old Stone Canyon stage route
· Purchase fair trade coffee whenever possible
· Support Fair Trade, organic, sustainable farming

Location

The loc ation of the first Dark Roast Java in Pleasantville is a prototype of future sites. Our
second site on busy Shoreline Road in Mount Hill will feature our flagship store. It will be loc ated
just off the Oak Patch Road and Highway 66 exit, ac ross from the Mount Hill Inn and The
Junction Restaurant. It is by far the best loc ation in Mount Hill—one of America's most affluent
cities.

We will build Dark Roast Java coffeehouses in the best loc ations possible, as this is the key
element in a successful operation.

Site selection criteria include:

· High traffic loc ation

· Small or mid-size affluent market
· Year-round tourist ac tivity
· Nearby (within 5 miles) student population
· Outside dining

Other sites that meet these criteria include Newburg, Springfield, Bayview, Shorewood,
Orchard Valley, Beac hey Head, and Capital City.

Exceptions will be made for some sites if they are deemed to be potentially very profitable.

Sites in other states might include Utah, New Mexico, Oregon, Washington, Montana, Idaho,
Colorado, etc. Plans are to loc ate Dark Roast Java coffeehouses in the Western states for
efficiency of supply and management.

Outside Dining

The coffeehouse/c afe experience is indelibly linked to its European origins, where al fresc o dining
is a way of life. Americans have embrac ed sidewalk dining. It is one of the fastest growing
additions to the American dining sc ene.

Sidewalk dining also provides an excellent way for prospec tive customers to see and "chec k
out" the coffeehouse for the first time.

Sampling

We will engage in several sampling ac tivities to introduce potential customers (and current
customers) to Dark Roast Java's range of drink options.

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· Samples will be distributed at the coffeehouse
· Samples will be given to passers- by on the street
· Disc ount coupons will be distributed on the street, via direct mail and at spec ial events
· Complementary coffee will be served at charitable and civic events
· Free coffee service will be provided to the Chamber of Commerce, a radio station, the
newspaper and at select government offices (e.g. the Planning and Zoning Department)

Portable Kiosk

Within 6 to 8 months we will create a portable Dark Roast Java kiosk to sell and market our
products at special events and community ac tivities. Pleasantville has more than 130 such
events every year. It will be an excellent way to publicize Dark Roast Java coffee.

The kiosk will be highly visible and fun. It will also potentially be very profitable, although it's
hard to determine how profitable with any ac curac y until the loc al response is measured. We
believe it could generate $75,000 - $100,000 annual revenue.

Pre-paid, re-loadable, frequency and discount cards

We will promote our program of gift cards and customer frequency cards to drive business and
stimulate cash flow. Industry records indicate that 25% - 40% of all gift card amounts go
unused. Also, gift cards have proven to be a popular holiday item ac counting for more than 5%
of total sales during December.

Pre-paid and re-loadable cards have also proven to be very popular with the major chain
coffeehouses, again accounting for a significant percentage of sales. These cards promote
customer loyalty as well.

Frequency cards rewarding the repeat customer with a free drink after a spec ified number of
visits are popular and proven methods to forge customer loyalty.

Disc ount cards are used to build goodwill among specific groups such as the Chamber of
Commerce members and college students.

By tying in with our computerized sales and inventory system we will be able to trac k usage
and alloc ate the expense to marketing.

The Future

The number of Dark Roast Java loc ations could easily reac h 20 - 25 within five years. While the
financials in this Business Plan only address the Pleasantville loc ation, we can extrapolate from
the store's performance (which will be carefully monitored and trac ked) to get a general idea of
the chain's projected profitability.

With ten c offeehouses the gross revenues, when fully realized, would be more than $10 million
using the third year performance figures. Even fac toring in the cost of additional staff and
other resources, a 10-store chain would likely generate a minimum of $1 million in profits
annually, while building significant valuation. A 25-store chain would easily top $2.5 million in
annual profits.

Dark Roast Java's start-up, implementation and operation in Pleasantville will be the "blueprint"
for future efficient expansion. Our new Mount Hill loc ation will incorporate the knowledge we gain

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with our first store as well as new creative ideas, and bec ome our "flagship" operation.

Sources: SRDS, Interep Radio, Scarborough Market Data Survey.

5.3 Sales Strategy

Our sales strategy includes:

· Staff salaries that are 10% above the industry average in order to attrac t the best
people

· Hiring for attitude so that we always have a friendly, enthusiastic staff to make
customers feel welcome and appreciated; constant staff training to assure the best
quality possible

· State-of-the-art sales/inventory system to (A) reduce customer waiting time, and (B)
create efficient product ordering

· Create a mobile kiosk to take Dark Roast Java into the community at special events,
farmer's markets, art shows, etc.

· Sell coffee, gift baskets and glass artwork on our website

· Establish coffee service at loc al businesses

· Sell gift cards, frequency cards, pre-paid cards, and offer disc ounts to key groups

· Create an ongoing sampling program

· Conduct a consistent, aggressive marketing program

· Be an ac tive member of the community; be visible at charitable functions

· Solicit customer feedback to constantly improve and streamline our operation

Key Strategy: an advanced and expandable point-of-sales system

After carefully trac king the performance of the Pleasantville store through an expandable and
highly detailed point-of-sale system, we will use this as a "blueprint" for expansion. For
example, daily sales are trac ked and analyzed by item, time period and cost of goods. Labor
requirements are matched to projected in-store sales based upon past performance for maximum
efficiency. Even after paying higher than average wages we expec t to alloc ate no more than
25% to labor costs.

Sales are linked to inventory to both streamline the efficiency of ordering and reduce
"shrinkage" by instantly alerting us to unusual shortages compared with revenues.

Sc heduling can be done online and easily revised to ac commodate changes—all while
projecting weekly, monthly, quarterly or annual labor costs. Sc hedules can be sent via email to
staff members.

Cost of goods can be monitored for increased efficiency too. As we continually research methods

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of delivering a high quality but cost-efficient product, and by making small incremental
improvements in the costs of items we expec t to increase overall COG by a minimum of 5%
during the first year of operation.

As expansion oc curs, the POS system can be adapted to eac h individual loc ation and allow the
central office to monitor the stores remotely as well as the overall combined operation. Close
monitoring will allow us to ac hieve a high level of communication between stores as well as
spot problems immediately and take corrective ac tion.

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5.3.1 Sales Forecast

Conservatively, we are forecasting an average of 300 c ustomers per day during the first year
with an average guest chec k expenditure for all items of $4.10. This figure was arrived at by
surveying the customer traffic at the nearest competing coffeehouses which have a range
of 150 - 500 c ustomers per day and an average customer expenditure of $4.10. We have
estimated our customer expenditure to be slightly higher (2.5%) due to the premium price we will
charge for some of our items. Total cost of sales is approximately 25%.

We expec t growth to oc cur ac ross all categories at about 10% annually as the business
bec omes more established and well-known, reac hing 400+ customers per day within a year
and more than 500+ within three years. These estimates are likely conservative. However, it is
possible we could attain a 1,000-per-day customer count within three years.

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Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
Coffee drinks $265,101 $344,631 $448,021
Tea, soft drinks, water, juice $167,007 $217,109 $282,241
Pastries, food items $154,126 $200,364 $260,473
Coffee beans $2,105 $2,526 $3,031
Events/mobile kiosk $0 $0 $0
Coffee service to businesses $3,300 $3,630 $3,993
Internet sales $8,500 $10,625 $13,281
Gift items $6,440 $7,728 $9,274
Total Sales $606,579 $786,613 $1,020,314

Direct Cost of Sales Year 1 Year 2 Year 3

Coffee drinks $43,828 $44,266 $44,709
Tea, soft drinks, water, juice $26,054 $26,315 $26,578
Pastries, food items $55,241 $55,793 $56,351
Coffee beans $1,280 $1,293 $1,306
Events, mobile kiosk $0 $0 $0
coffee service to businesses $760 $768 $775
Internet sales $3,925 $3,964 $4,004
Gift items $10,109 $10,210 $10,312
Subtotal Direct Cost of Sales $141,197 $142,609 $144,035

5.4 Milestones
The ac companying table lists important program milestones, with dates and managers in
charge, and budgets for eac h. The milestone sc hedule indicates our emphasis on planning for
implementation. A similar milestone development program will be developed for our Mount

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Hill loc ation to insure its timely execution. What the table doesn't show is the commitment
behind it. Our business plan includes complete provisions for plan-vs- ac tual analysis, and we
will hold follow-up meetings every month to disc uss the variance and course corrections.

Table: Milestones
Milestones

Milestone Start Date End Date Budget Manager Department

Business/Marketing Plan 2/1/2003 4/30/2003 $500 N. P-S Marketing
Secure Funding 2/1/2003 4/30/2003 $500 N. P-S Marketing
Secure lease 2/10/2003 4/30/2003 TBD N. P-S Admin
Secure name licensing 2/10/2003 4/30/2003 TBD N. P-S Marketing
Marketing plan 2/10/2003 4/30/2003 $0 N. P-S Marketing
Structure company type 2/15/2003 4/30/2003 $0 N. P-S Marketing
Develop investor program 2/15/2003 4/30/2003 $0 N. P-S Marketing
Attend Coffee Fest 2/27/2003 3/1/2003 $500 N. P-S/V. L Marketing
Health Dept. 3/1/2003 5/15/2003 TBD N. P-S/V. L Admin
Select and order furnishings 5/1/2003 6/15/2003 TBD N. P-S/V. L Admin
Site plans 3/1/2003 4/30/2003 TBD N. P-S Admin
Select construction contractor 3/15/2003 4/15/2003 $150 N. P-S Admin
Join Spec. Coffee Retailers 3/15/2003 5/30/2003 $250 N. P-S/V. L Marketing
Select and order lighting 4/1/2003 5/30/2003 TBD N. P-S/V. L Marketing
Create employee manual 4/1/2003 5/30/2003 $0 N. P-S Personnel
Alliance with water company 4/1/2003 5/30/2003 $0 N. P-S Admin
Join Chamber of Commerce 4/1/2003 5/30/2003 $250 N. P-S/V. L Admin
Select cash register system 4/15/2003 5/30/2003 $0 N. P-S Admin
Business license, etc. 4/15/2003 5/30/2003 $300 N. P-S/V. L Admin
Select paint contractor 4/15/2003 5/30/2003 $0 V. L Admin
Choose paint palette 4/15/2003 5/30/2003 $0 N. P-S/V. L Admin
Select and order flooring 4/15/2003 5/30/2003 TBD N. P-S/V. L Marketing
Gift items, suppliers, order 4/15/2003 5/15/2003 TBD V. L Marketing
Select pastry supplier 4/15/2003 5/30/2003 $0 V. L Admin
Select equipment supplier 4/15/2003 5/15/2003 $0 N. P-S Admin
Graphics/brochure design 4/15/2003 5/30/2003 $0 N. P-S Marketing
Select confection suppliers 4/15/2003 5/30/2003 $0 N. P-S/V. L Admin
Select juice suppliers 4/15/2003 5/30/2003 $0 N. P-S Admin
Credit card companies 4/30/2003 6/15/2003 $0 N. P-S Admin
Create training program 4/30/2003 6/15/2003 $0 V. L Personnel
Select music system 5/1/2003 6/15/2003 $2,500 N. P-S/V. L Admin
Install wireless Internet 5/1/2003 6/15/2003 TBD N. P-S/V. L Admin
Hire manager, baristas 7/1/2003 9/15/2003 TBD N. P-S/V. L Personnel
Select business insurance 7/1/2003 7/20/2003 TBD N. P-S Admin
Design, print stationery 7/15/2003 7/31/2003 $1,000 N. P-S Admin
Pre-opening parties 9/1/2003 9/15/2003 $1,000 V. L Marketing
GRAND OPENING 9/15/2003 9/30/2003 $1,000 N. P-S/V. L Admin/Marketing
Acheive 700+ daily customers 12/12/2003 1/31/2004 $0 N. P-S/V. L Admin/Marketing
Totals $7,950

6.0 Web Plan Summary

We plan to expand the functionality of our website so that it bec omes a substantial revenue
stream for Dark Roast Java.

Although we've projected modest sales bec ause of the difficulty in predicting online sales
ac tivity, we believe the potential exists for Internet sales to bec ome a substantial percentage of

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our revenue.

We will sell a number of items at our website, including:

· Whole beans
· Tea
· Coc oa mixes
· Choc olates
· Gift baskets
· Gift items
· Art glass

We will sell a variety of high design stained glass, glass artwork and ac cessories featured in
our coffeehouses by establishing ourselves as an agent for the artist/manufacturers. We will
proc ess the order and the artist will fulfill it. In this way we provide exposure and additional sales
ac tivity for the artists, and Dark Roast Java creates an additional revenue stream that could
bec ome substantial over time.

Special downloadable offers good at the retail stores will be posted from time to time on the
website.

Eventually, customers will be able to reload their Dark Roast Java Card online so they can use it
in lieu of cash or credit when they make purchases.

The website will also function as an online "broc hure" for both the Dark Roast Java quality
story as well as enable visitors to "see" our retail store, get directions and maps, see our menu
and find out about spec ial events.

6.1 Website Marketing Strategy

All communications materials will include the Dark Roast Java website address. For the media,
an online press kit will be available which will include downloadable photos, PR releases, stories of
interest, testimonials, bios of key management and reproduceable logos.

Special PR will promote our gift basket business and the sale of our upsc ale design glass
artworks.

We will host online "events" for our customers. For example, a visiting author may go online to
chat with visitors to our website. Or we may support a charities' fund-raising ac tivities. This
will provide us with opportunities for media coverage.

Eventually, when more stores are opened, the website will function as a means of internal
communication through a password-protected area. Here, company rules, health department
regulations, news, chat, "live" internal announcements and virtual meetings will take plac e.

In-store Internet computing

An appealing customer feature at Dark Roast Java will be two Internet ac cess stations with
17" monitors. These will enable people to ac cess the Internet while at the store. The price for
this ac cess hasn't been set yet but will be approximately $15 an hour with some frac tional
division rate structure at 15-minute intervals (perhaps $5 for every quarter hour). The Dark

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Roast Java website home page will be the always-on start page for the monitors.

The Internet stations enable customers to chec k their email or ac cess websites for business,
study or travel information.

Internet ac cess is provided more as a customer service than a revenue source. Although it will
return a profit, the amount is difficult to determine now and so it hasn't been fac tored into the
P&L.

Our best estimate is that the two stations will be on for a total of four hours daily, producing
$1,800 a month in gross revenue ($21,600 annually minus approximately $1,000 for the basic fee
plus the percentage of sales).

6.2 Development Requirements

Dark Roast Java plans to employ a graphic designer and bac k-end user interfac e technical
developer to create our simple, classy, yet Internet foc used site.

The maintenance of the site will be done by contrac ted outside consultants. As the website is
expanded and improved, future development may include items such as trac king, newsletters,
down-loadable menus, a coffee "chat" room and user Web pages. A technical resource may need
to be contrac ted to build the trac kable download and the newsletter capabilities.

7.0 Management Summary

The expansion of the Dark Roast Java concept will be managed by Ned Powers- Sebastiane
and Victor Lubitsc h, with assistance from our outside support team.

Ned Powers-Sebastiane

Ned has more than 35 years experience in marketing/sales with spec ial expertise in the retail
sector.

· President of Powers- Sebastiane Advertising & Public Relations. Founded 1982.

· Owner/founder of Pan National Motor Tours.
· Sr. VP/Chief Creative Officer at ******.
· President/General Manager of ******.
· VP/Director of Marketing & Advertising at ******.
· VP/Chief Marketing Officer at ******.
· VP/Creative Director and Team Leader at ******.

Ned Powers- Sebastiane will be responsible for the site development, construction supervision,
equipment ordering, marketing/PR, website design/development and government issues. Ned is
a graduate of the Specialty Coffee Association's training program for coffeehouse operation
and management.

Victor Lubitsch

Victor has more than 25 years experience in business and selling. He has been a motivational
speaker and image consultant as well.
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· President/CEO of the Pleasantville Chamber of Commerce, 2000 - 2003.
· Founder/Owner of Specialty Agency, 1980 - 1991.
· State Business Man of the Year.
· Owner/founder of Brilliant! Idea company.
· Director of Plac ement, Local Business College.
· Top recruiter at ****** Company.
· Top recruiter at ******.

Victor will be responsible for staffing, menu development, training, product ordering, interior
design and ac counting supervision. Victor is a graduate of the SCAA coffeehouse management
program and recently attended several training seminars at Coffee Fest 2003.

*Confidential and proprietary information omitted from this sample plan.

7.1 Personnel Plan

The personnel plan is included in the following table.

It shows the owners' salaries, a full-time manager's annual salary, eight part-time salaries for
espresso servers and a part-time bookkeeper and/or website supervisor.

Table: Personnel
Personnel Plan
Year 1 Year 2 Year 3
Ned Powers-Sebastiane $39,000 $80,000 $80,000
Victor Lubitsch $39,000 $80,000 $80,000
Manager $34,000 $35,000 $35,000
Manager $0 $30,000 $30,000
Barista #1 $9,600 $9,600 $9,600
Barista #2 $9,600 $9,600 $9,600
Barista #3 $9,600 $9,600 $9,600
Barista #4 $9,600 $9,600 $9,600
Barista #5 $9,600 $9,600 $9,600
Barista #6 $9,600 $9,600 $9,600
Barista #7 $2,800 $7,200 $9,600
Barista #8 $3,000 $7,200 $7,200
Bookkeeper $8,000 $15,000 $15,000
Website Supervisor $0 $25,000 $25,000
Total People 10 11 12

Total Payroll $183,400 $337,000 $339,400

8.0 Financial Plan

· Sales growth will be a minimum of 15% annually, margins excellent, profits at
approximately 20% - 25%, cash flow adequate.

· Marketing will remain below 5% of sales.

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· The company will invest residual profits into financial markets or real estate.

· Future cash investments will use NPV projections to ac hieve maximum return with limited
risk.

8.1 Important Assumptions

· The 20-year record of positive growth for spec ialty coffee drinking will continue at a
healthy rate. The Specialty Coffee Association says that the market is far from saturation
and will not reac h maturity until at least 2019.

· The resilience of the coffeehouse industry to negative national and world events will
continue. Despite recession and war the coffeehouse industry has shown strong growth
every year for the past two dec ades.

· The quality of national chains will remain the same or dec line slightly rather than
improve as they standardize their stores, increase automation of espresso drinks
and mass-produce the roasting proc ess.

· Coffee drinks will continue to be considered an "affordable luxury."

· 15% minimum sales growth rate over the next three years as Dark Roast Java bec omes
well known.

Table: General Assumptions

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 3.00% 3.00% 3.00%
Long-term Interest Rate 3.00% 3.00% 3.00%
Tax Rate 20.00% 20.00% 20.00%
Other 0 0 0

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8.2 Break-even Analysis

A break-even analysis table has been c ompleted on the basis of average costs/prices. With fixed
costs of $26,400 and $4.50 an average sale, we need approximately $35,000 per month to
break-even.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $34,422

Assumptions:
Average Percent Variable Cost 23%
Estimated Monthly Fixed Cost $26,409

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8.3 Projected Profit and Loss

We project high net profits starting in the first year. Our growth rate is based upon industry
averages, fac toring in the loc al conditions. We expec t growth of 15% annually for the first
three years before leveling off at the 800 - 900 c ustomer per day average traffic rate.

First fisc al year gross revenues are expec ted to exceed $600,000 and after-tax net profits of
approximately $99,000—increasing to more than $260,000 by the third fisc al year-end.

Our margins are very good.This is due in large part to the low direct cost of sales as well as the
low operating costs in general for coffeehouses.

Higher staff salaries, owner/operator salaries, marketing costs and rent for a premium loc ation
depress profits but, conversely, they also ultimately contribute to higher earnings and profits.

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Table: Profit and Loss

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $606,579 $786,613 $1,020,314
Direct Cost of Sales $141,197 $142,609 $144,035
Other Costs of Goods $24,000 $28,000 $32,000
Total Cost of Sales $165,197 $170,609 $176,035

Gross Margin $441,382 $616,004 $844,279

Gross Margin % 72.77% 78.31% 82.75%

Expenses
Payroll $183,400 $337,000 $339,400
Sales and Marketing $12,500 $8,000 $8,000
Depreciation $6,000 $4,000 $4,000
Rent $45,900 $55,000 $60,000
Utilities $9,200 $14,000 $16,000
Insurance $2,400 $2,400 $2,500
Legal/accounting $6,000 $6,000 $6,000
Payroll Taxes $27,510 $50,550 $50,910
Mobile Kiosk $0 $0 $0
Misc - maintenance, cleaning, training, $24,000 $25,000 $25,000
fees

Total Operating Expenses $316,910 $501,950 $511,810

Profit Before Interest and Taxes $124,472 $114,054 $332,469

EBITDA $130,472 $118,054 $336,469
Interest Expense $0 $0 $0
Taxes Incurred $24,894 $22,811 $66,494

Net Profit $99,577 $91,243 $265,975

Net Profit/Sales 16.42% 11.60% 26.07%

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8.4 Projected Cash Flow

We are positioning ourselves in the market as a low to medium risk concern with relatively steady
cash flows. Ac counts payable is paid at the end of eac h month, while sales are in c ash,
giving Dark Roast Java an excellent cash structure. Fifty percent of cash above $20,000 will be
invested into semi-liquid stoc k portfolios to dec rease the opportunity cost of cash held.
Our initial investor contributions are designed to provide us with a strong cash position at all
times.

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Table: Cash Flow

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $606,579 $786,613 $1,020,314
Subtotal Cash from Operations $606,579 $786,613 $1,020,314

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $606,579 $786,613 $1,020,314

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $183,400 $337,000 $339,400
Bill Payments $275,940 $356,361 $406,229
Subtotal Spent on Operations $459,340 $693,361 $745,629

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $17,600 $26,400 $26,400
Subtotal Cash Spent $476,940 $719,761 $772,029

Net Cash Flow $129,639 $66,852 $248,285

Cash Balance $131,139 $197,991 $446,276

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8.5 Projected Balance Sheet

All of our tables will be updated monthly to reflect past performance and future assumptions.
Future assumptions will not be based on past performance but rather on economic cycle ac tivity,
regional industry strength, and future cash flow possibilities. We expec t solid growth in net worth
beyond the year 2003.

Table: Balance Sheet

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets

Current Assets
Cash $131,139 $197,991 $446,276
Inventory $16,591 $14,264 $14,407
Other Current Assets $15,000 $15,000 $15,000
Total Current Assets $162,730 $227,256 $475,683

Long-term Assets
Long-term Assets $62,000 $62,000 $62,000
Accumulated Depreciation $6,000 $10,000 $14,000
Total Long-term Assets $56,000 $52,000 $48,000
Total Assets $218,730 $279,256 $523,683

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $33,253 $28,935 $33,788
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $33,253 $28,935 $33,788

Long-term Liabilities $0 $0 $0
Total Liabilities $33,253 $28,935 $33,788

Paid-in Capital $250,500 $250,500 $250,500

Retained Earnings ($164,600) ($91,423) ($26,579)
Earnings $99,577 $91,243 $265,975
Total Capital $185,477 $250,321 $489,896
Total Liabilities and Capital $218,730 $279,256 $523,683

Net Worth $185,477 $250,321 $489,896

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8.6 Business Ratios

We expec t our net profit margin, gross margin, and Return on Assets to increase steadily over
the three-year period. Return on Equity will dec rease due to lower equity needs and higher
cash inflow. Net working capital generated by the business will increase steadily eac h year,
proving that we have the cash flows to remain a going concern independent of outside capital
infusion.

While our ratios are not all in sync with those of the industry, due to the unique nature of our
business, it's important to point out that in key areas the numbers are excellent. The only
industry ratio category currently available, SIC Code 5812.0304, includes cafes, restaurants
and other businesses serving coffee. These businesses are significantly different from the Dark
Roast Java coffeehouse concept.

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Table: Ratios
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 29.68% 29.71% 5.24%

Percent of Total Assets

Inventory 7.59% 5.11% 2.75% 4.34%
Other Current Assets 6.86% 5.37% 2.86% 35.11%
Total Current Assets 74.40% 81.38% 90.83% 43.74%
Long-term Assets 25.60% 18.62% 9.17% 56.26%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 15.20% 10.36% 6.45% 18.93%

Long-term Liabilities 0.00% 0.00% 0.00% 25.48%
Total Liabilities 15.20% 10.36% 6.45% 44.41%
Net Worth 84.80% 89.64% 93.55% 55.59%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 72.77% 78.31% 82.75% 61.91%
Selling, General & Administrative Expenses 56.32% 66.62% 56.54% 39.08%
Advertising Expenses 0.00% 0.00% 0.00% 2.55%
Profit Before Interest and Taxes 20.52% 14.50% 32.58% 1.38%

Main Ratios
Current 4.89 7.85 14.08 1.14
Quick 4.39 7.36 13.65 0.79
Total Debt to Total Assets 15.20% 10.36% 6.45% 49.97%
Pre-tax Return on Net Worth 67.11% 45.56% 67.87% 3.97%
Pre-tax Return on Assets 56.91% 40.84% 63.49% 7.93%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 16.42% 11.60% 26.07% n.a
Return on Equity 53.69% 36.45% 54.29% n.a

Activity Ratios
Inventory Turnover 10.10 9.24 10.05 n.a
Accounts Payable Turnover 9.30 12.17 12.17 n.a
Payment Days 27 32 28 n.a
Total Asset Turnover 2.77 2.82 1.95 n.a

Debt Ratios
Debt to Net Worth 0.18 0.12 0.07 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios
Net Working Capital $129,477 $198,321 $441,896 n.a
Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios
Assets to Sales 0.36 0.36 0.51 n.a
Current Debt/Total Assets 15% 10% 6% n.a
Acid Test 4.39 7.36 13.65 n.a
Sales/Net Worth 3.27 3.14 2.08 n.a
Dividend Payout 0.18 0.29 0.10 n.a

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 Appendix
Table: Sales Forecast

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Coffee drinks 0% $11,915 $20,086 $14,600 $18,000 $18,500 $18,500 $24,500 $25,500 $27,500 $28,000 $28,500 $29,500
Tea, soft drinks, water, juice 0% $4,290 $7,778 $10,899 $11,000 $11,340 $13,000 $15,700 $19,500 $19,500 $19,000 $17,000 $18,000
Pastries, food items 0% $4,867 $9,909 $12,600 $12,000 $12,500 $12,750 $13,000 $14,000 $15,500 $15,000 $15,000 $17,000
Coffee beans 0% $50 $25 $50 $80 $100 $100 $100 $300 $300 $300 $300 $400
Events/mobile kiosk 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Coffee service to businesses 0% $0 $0 $500 $0 $100 $100 $300 $300 $500 $500 $500 $500
Internet sales 0% $0 $0 $0 $0 $0 $0 $500 $1,000 $1,000 $2,000 $2,000 $2,000
Gift items 0% $1,958 $282 $300 $300 $300 $300 $500 $500 $500 $500 $500 $500
Total Sales $23,080 $38,080 $38,949 $41,380 $42,840 $44,750 $54,600 $61,100 $64,800 $65,300 $63,800 $67,900

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Coffee drinks $2,980 $5,022 $3,650 $2,700 $2,700 $2,776 $3,450 $3,825 $4,125 $4,200 $3,975 $4,425
Tea, soft drinks, water, juice $645 $1,168 $1,635 $1,650 $1,701 $2,950 $2,355 $2,925 $2,925 $2,850 $2,550 $2,700
Pastries, food items $1,500 $3,500 $4,542 $4,132 $4,525 $4,620 $4,916 $5,114 $5,530 $5,217 $5,217 $6,428
Coffee beans $35 $15 $25 $50 $65 $65 $65 $185 $185 $185 $185 $220
Events, mobile kiosk $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
coffee service to businesses $0 $0 $25 $0 $25 $25 $75 $75 $125 $125 $125 $160
Internet sales $0 $100 $0 $0 $0 $0 $225 $450 $450 $900 $900 $900
Gift items $800 $1,350 $1,400 $2,500 $1,200 $1,350 $250 $259 $250 $250 $250 $250
Subtotal Direct Cost of Sales $5,960 $11,155 $11,277 $11,032 $10,216 $11,786 $11,336 $12,833 $13,590 $13,727 $13,202 $15,083

Page 1
 Appendix
Table: Personnel

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Ned Powers-Sebastiane 0% $0 $0 $0 $0 $4,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Victor Lubitsch 0% $0 $0 $0 $0 $4,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Manager 0% $1,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Manager 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Barista #1 0% $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800
Barista #2 0% $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800
Barista #3 0% $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800
Barista #4 0% $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800
Barista #5 0% $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800
Barista #6 0% $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800
Barista #7 0% $0 $0 $0 $0 $0 $400 $400 $400 $400 $400 $400 $400
Barista #8 0% $0 $0 $0 $0 $0 $0 $500 $500 $500 $500 $500 $500
Bookkeeper 0% $1,000 $1,000 $1,000 $1,000 $500 $500 $500 $500 $500 $500 $500 $500
Website Supervisor 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 9 9 9 9 9 10 10 10 10 10 10 10

Total Payroll $6,800 $8,800 $8,800 $8,800 $16,300 $18,700 $19,200 $19,200 $19,200 $19,200 $19,200 $19,200

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 Appendix
Table: General Assumptions

General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Long-term Interest Rate 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Tax Rate 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

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 Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $23,080 $38,080 $38,949 $41,380 $42,840 $44,750 $54,600 $61,100 $64,800 $65,300 $63,800 $67,900
Direct Cost of Sales $5,960 $11,155 $11,277 $11,032 $10,216 $11,786 $11,336 $12,833 $13,590 $13,727 $13,202 $15,083
Other Costs of Goods $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Total Cost of Sales $7,960 $13,155 $13,277 $13,032 $12,216 $13,786 $13,336 $14,833 $15,590 $15,727 $15,202 $17,083

Gross Margin $15,120 $24,925 $25,672 $28,348 $30,624 $30,964 $41,264 $46,267 $49,210 $49,573 $48,598 $50,817
Gross Margin % 65.51% 65.45% 65.91% 68.51% 71.48% 69.19% 75.58% 75.72% 75.94% 75.92% 76.17% 74.84%

Expenses
Payroll $6,800 $8,800 $8,800 $8,800 $16,300 $18,700 $19,200 $19,200 $19,200 $19,200 $19,200 $19,200
Sales and Marketing $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,500 $1,000 $1,000 $1,000 $1,000
Depreciation $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Rent $3,800 $3,800 $3,800 $3,800 $3,800 $3,800 $3,800 $3,800 $3,800 $3,900 $3,900 $3,900
Utilities $400 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800
Insurance $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Legal/accounting $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Payroll Taxes 15% $1,020 $1,320 $1,320 $1,320 $2,445 $2,805 $2,880 $2,880 $2,880 $2,880 $2,880 $2,880
Mobile Kiosk 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Misc - maintenance, cleaning, $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
training, fees

Total Operating Expenses $16,220 $18,920 $18,920 $18,920 $27,545 $30,305 $30,880 $31,380 $30,880 $30,980 $30,980 $30,980

Profit Before Interest and Taxes ($1,100) $6,005 $6,752 $9,428 $3,079 $659 $10,384 $14,887 $18,330 $18,593 $17,618 $19,837
EBITDA ($600) $6,505 $7,252 $9,928 $3,579 $1,159 $10,884 $15,387 $18,830 $19,093 $18,118 $20,337
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred ($220) $1,201 $1,350 $1,886 $616 $132 $2,077 $2,977 $3,666 $3,719 $3,524 $3,967

Net Profit ($880) $4,804 $5,402 $7,542 $2,463 $527 $8,307 $11,910 $14,664 $14,874 $14,094 $15,870
Net Profit/Sales -3.81% 12.62% 13.87% 18.23% 5.75% 1.18% 15.21% 19.49% 22.63% 22.78% 22.09% 23.37%

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 Appendix
Table: Cash Flow

Pro Forma Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received

Cash from Operations

Cash Sales $23,080 $38,080 $38,949 $41,380 $42,840 $44,750 $54,600 $61,100 $64,800 $65,300 $63,800 $67,900
Subtotal Cash from Operations $23,080 $38,080 $38,949 $41,380 $42,840 $44,750 $54,600 $61,100 $64,800 $65,300 $63,800 $67,900

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $23,080 $38,080 $38,949 $41,380 $42,840 $44,750 $54,600 $61,100 $64,800 $65,300 $63,800 $67,900

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending $6,800 $8,800 $8,800 $8,800 $16,300 $18,700 $19,200 $19,200 $19,200 $19,200 $19,200 $19,200
Bill Payments $357 $10,917 $17,446 $24,378 $24,215 $22,815 $26,728 $26,266 $31,141 $31,256 $30,828 $29,594
Subtotal Spent on Operations $7,157 $19,717 $26,246 $33,178 $40,515 $41,515 $45,928 $45,466 $50,341 $50,456 $50,028 $48,794

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200
Subtotal Cash Spent $7,157 $19,717 $26,246 $33,178 $42,715 $43,715 $48,128 $47,666 $52,541 $52,656 $52,228 $50,994

Net Cash Flow $15,923 $18,363 $12,704 $8,202 $124 $1,035 $6,472 $13,434 $12,259 $12,644 $11,572 $16,906
Cash Balance $17,423 $35,786 $48,490 $56,692 $56,817 $57,852 $64,324 $77,758 $90,016 $102,661 $114,233 $131,139

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 Appendix
Table: Balance Sheet

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances

Current Assets
Cash $1,500 $17,423 $35,786 $48,490 $56,692 $56,817 $57,852 $64,324 $77,758 $90,016 $102,661 $114,233 $131,139
Inventory $25,000 $19,040 $12,271 $12,405 $12,135 $11,238 $12,965 $12,470 $14,116 $14,949 $15,100 $14,522 $16,591
Other Current Assets $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
Total Current Assets $41,500 $51,463 $63,057 $75,895 $83,827 $83,054 $85,816 $91,793 $106,874 $119,965 $132,761 $143,755 $162,730

Long-term Assets
Long-term Assets $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000
Accumulated Depreciation $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000
Total Long-term Assets $62,000 $61,500 $61,000 $60,500 $60,000 $59,500 $59,000 $58,500 $58,000 $57,500 $57,000 $56,500 $56,000
Total Assets $103,500 $112,963 $124,057 $136,395 $143,827 $142,554 $144,816 $150,293 $164,874 $177,465 $189,761 $200,255 $218,730

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities
Accounts Payable $0 $10,343 $16,633 $23,569 $23,459 $21,923 $25,858 $25,228 $30,099 $30,226 $29,847 $28,447 $33,253
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $10,343 $16,633 $23,569 $23,459 $21,923 $25,858 $25,228 $30,099 $30,226 $29,847 $28,447 $33,253

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $10,343 $16,633 $23,569 $23,459 $21,923 $25,858 $25,228 $30,099 $30,226 $29,847 $28,447 $33,253

Paid-in Capital $250,500 $250,500 $250,500 $250,500 $250,500 $250,500 $250,500 $250,500 $250,500 $250,500 $250,500 $250,500 $250,500
Retained Earnings ($147,000) ($147,000) ($147,000) ($147,000) ($147,000) ($149,200) ($151,400) ($153,600) ($155,800) ($158,000) ($160,200) ($162,400) ($164,600)
Earnings $0 ($880) $3,924 $9,326 $16,868 $19,331 $19,858 $28,165 $40,075 $54,739 $69,613 $83,708 $99,577
Total Capital $103,500 $102,620 $107,424 $112,826 $120,368 $120,631 $118,958 $125,065 $134,775 $147,239 $159,913 $171,808 $185,477
Total Liabilities and Capital $103,500 $112,963 $124,057 $136,395 $143,827 $142,554 $144,816 $150,293 $164,874 $177,465 $189,761 $200,255 $218,730

Net Worth $103,500 $102,620 $107,424 $112,826 $120,368 $120,631 $118,958 $125,065 $134,775 $147,239 $159,913 $171,808 $185,477

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